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Fitch Rts Morgan Hill Unified School District, CA $38MM GOs `AA'

Business Wire, July 20, 2000

Business Editors

NEW YORK--(BUSINESS WIRE)--July 20, 2000

Morgan Hill Unified School District, Santa Clara County, Calif.'s $38,000,000 general obligation bonds, election of 1999, series A, are rated 'AA' by Fitch. The bonds are scheduled to sell the week of July 24 through negotiation by Stone & Youngberg L.L.C.

The 'AA' rating reflects Morgan Hill Union School District's strong regional economy, good finances, and moderate debt levels. The district includes a wealthy, predominantly residential tax base located in the southern edge of the Silicon Valley. Development within the district continues with substantial available land for future growth. Financial operations are steady with good historical fund balance levels and closely balanced operations. Debt levels are moderate and should remain manageable following a second bond issuance planned for 2001 as part of the district's five-year capital program. Enrollment is projected to increase by approximately 4% over the next five years.

The district covers approximately 300 square miles, including the entire city of Morgan Hill, southern portions of San Jose, and adjacent unincorporated territory of Santa Clara County. This wealthy, residential district serves an estimated 40,000 residents, many of whom work in the strong regional Silicon Valley economy. The district has roughly 9,300 students in 14 school facilities. Enrollment declined slightly over the past two years but is expected to increase by 400 students or 4% through 2005. The bond issue, part of the district's five-year capital program, helps fund several school renovation and modernization projects, as well as the construction of two new schools to help relieve capacity constraints. However, there is some uncertainty regarding the location of the new high school, which could interrupt the district's capital program schedule.

Financial operations are sound, with operating surpluses in two of the past three years and a healthy fund balance. The fiscal 1999 fund balance equaled 9.9% of expenditures and transfers. Estimated actuals for year-end 2000 indicate a slight drawdown on the general fund balance followed by a slight increase projected for fiscal 2001. The district's fund balance has averaged 8.0% of total general fund spending, well above the state's required 3.0% minimum. Local revenue limit funding is an increasing percentage of general fund revenues, reflecting the district's strong and expanding tax base.

No general obligation bonds are currently outstanding and the debt burden is moderate following this sale. The bonds are the first series from a $72.5 million authorization passed in 1999 by 70% of voters. The district plans to issue a second series for the remaining authorized amount during the next several years; debt levels will remain moderate. No further bond authorizations are being pursued.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.

COPYRIGHT 2000 Business Wire
COPYRIGHT 2008 Gale, Cengage Learning
 

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